Chip tools become latest victim of global semiconductor crunch

Among the big headlines around automotive #chip shortage & tight #foundry capacity, what haven’t garnered as much attention perhaps are the ongoing shortages & longer lead times for the #semiconductor equipments & raw materials. All the way up & down the #supplychain, everybody is affected, including #OSATs. Lead times for equipments have extended up to ~9 months from typically 4 months, while that for raw materials has gone up to 40 weeks & above in certain cases from the typical 12-15 weeks duration. Navigating these unprecedented disruptions means balancing the need for speed & business prudence by taking proactive measures such as

– Qualify first, Produce next: Manufacturers can get one of the lines expedited for product qualification first, while waiting for the delivery of all the lines needed to ramp up production
– Collaborate actively & responsibly with the most trusted suppliers: Companies can provide details of customizations (drawings, specifications) well in advance while procurement process is on, to enable them to save time. We’ve been able to save upto 2 months via such approach – a testament to our longstanding partnerships. Also, companies should provide a longer term business outlook to enable suppliers to secure the volumes at their end
– Deeper customer engagement: Companies should engage with customers to understand their business & order outlook for longer durations than before.

For OSATs, this will help mitigate & manage challenges in linearity of loading due to wafer delivery issues
– Lease short term: While waiting for delivery of new equipments, leasing equipments on a short term basis from providers such as #Mactronix#Aresys etc. can help companies in preventing loss of business in a cost effective manner

While above can help manufacturers to ride out the ongoing situation pragmatically, greater geographical diversity of supply chain triggered due to Covid, is likely the longer term change to be implemented for achieving more flexibility & adaptability. Case in point being the recent announcement by #AT&S, PCB & IC maker from Austria, to setup its first factory in SE Asia with an investment of ~1.7 billion euro. And, likely others will follow!